The Economics of Scotland’s Choice

The supporters of Scottish independence in Thursday’s referendum argue that breaking away from Britain will give Scotland the “powers it needs to build a more prosperous country and a fairer society.” Indeed, separation from Britain would allow the Scottish government, which is generally more liberal on economic and public policies, to set its own course for a society closer to that of a Scandinavian country.

But Scotland will face significant economic risks if it leaves Britain, which it has been a part of for more than 300 years. This will be particularly true if it keeps using the pound as its currency.

Scotland’s economy relies heavily on financial services and oil production, and it is in much better shape than the economies of other European nations. Its unemployment rate, for instance, was 6.4 percent in the second quarter, substantially lower than the unemployment rate of 11.5 percent in the 18-country eurozone. But independence could make Scotland vulnerable to new problems that cannot be easily dismissed.

Scottish independence leaders say the country will continue using the British pound, even after independence. That would be a terrible idea. The euro crisis provides a vivid example of the dangers of a currency union that is not accompanied by a political union.

The recessions suffered by countries like Greece, Ireland and Spain were particularly devastating because those countries did not have their own independent central banks that could lower interest rates, devalue their currencies, buy government bonds or provide loans to weakened banks when their economies went into recession. Worse, they were forced to enact counterproductive austerity policies by officials from the European Union, the European Central Bank and the International Monetary Fund, as a condition for loans to help them get through the financial crisis.

The same scenario would be possible in a politically independent Scotland. If the jobless rate rose in Scotland but remained stable or low in the rest of Britain — England, Wales and Northern Ireland — the Bank of England would be unlikely to cut interest rates solely to help the Scots. (For much of the last 20 years, the jobless rate has been higher in Scotland than in Britain as a whole.)

There’s also no certainty that the London-based central bank, which would no longer feel accountable to Scottish voters, would do everything in its power to save a failing Scottish bank. Two of Scotland’s biggest banks, the Royal Bank of Scotland and Lloyds Banking Group, which received financial lifelines from the British government during the crisis, said on Thursday that they would relocate to England to be assured that they would be able to borrow from the Bank of England.

An independent Scotland would also be more vulnerable to declines in oil and gas production in the North Sea. Nationalists point out that more than 90 percent of tax revenue from that production would come from fields in Scottish waters. While that is a lot, production in the North Sea has been falling steadily since 1999, according to the Office for Budget Responsibility, a British government agency. In the 2013-14 fiscal year, oil and gas production generated £4.7 billion ($7.6 billion) in tax revenue for Britain, down from £6.1 billion in the year before.

Nationalist leaders who are campaigning for a yes vote in this week’s referendum have promised to bolster the Scottish economy by increasing spending on early education programs, transportation, renewable energy and other things they say politicians in London have ignored. But Scotland could arguably do all of them while remaining part of Britain.

In fact, leaders of the major political parties in the British Parliament have pledged to give Scotland more autonomy over taxes and spending policy if a majority of Scots vote no. The appeal of independence, of course, cannot simply be measured in pecuniary terms. Each voter will have to resolve the conflict between national identity and economic reality for themselves.

A version of this article appears in print on , on Page SR10 of the New York edition with the headline: The Economics of Scotland’s Choice. Order Reprints | Today’s Paper | Subscribe